Beta-cell compensation is an adaptive mechanism by which ?-cells increase insulin secretion to overcome insulin resistance or oxidative stress for maintaining euglycemia in obesity. Beta-cell compensation culminates in the expansion of ?-cell mass and/or upregulation of insulin synthesis/secretion. Failure of ?- cells to compensate for insulin resistance or oxidative stress contributes to insulin insufficiency and overt diabetes. How ?-cells compensate for insulin resistance or oxidative stress and what causes ?-cell failure are poorly understood. FoxO1 is a transcription factor that integrates insulin (or IGF-1) signaling to target genes in cell survival, proliferation, differentiation, metabolism and anti-oxidation. Human with genetic FoxO1 variants are associated with an increased risk of ?-cell dysfunction and type 2 diabetes. We show that transgenic mice with RIP (rat insulin promoter)-directed FoxO1 production in islets are protected against fat-induced glucose intolerance and streptozotocin-elicited diabetes. This effect is attributable to augmented glucose-stimulated insulin secretion and increased ?-cell mass in RIP-FoxO1 transgenic mice. FoxO1 activity is upregulated in islets, correlating with the physiological induction of ?-cell compensation in dietary obese mice. These new data underscore the importance of FoxO1 in ?-cell function, spurring the hypothesis that FoxO1 contributes to ?-cell compensation. To address this hypothesis, we propose three specific aims: 1) To determine the effect of FoxO1 gain-of-function on ?-cell compensation for insulin resistance; 2) To address the mechanisms by which FoxO1 enhances ?-cell compensation for oxidative stress; and 3) To determine the effect of FoxO1 loss-of-function on ?-cell compensation in obesity and diabetes. To achieve these goals, we will employ gene transfer, transgenic expression, gene knockout and siRNA-mediated gene-silencing approaches to achieve ?-cell specific FoxO1 production and alternatively conditional FoxO1 depletion in mature islets in vivo as well as in human islets ex vivo, followed by determining the ability of ?-cells with FoxO1 gain- vs. loss-of-function to compensate for insulin resistance and oxidative stress. We have provided proof-of-principle and demonstrated the feasibility for the proposal. Accomplishing this project will deepen our understanding of the mechanisms of ?-cell compensation and ?- cell failure in diabetes.